Why Amazon HQ2 and the surrounding area?

Amazon is establishing a new headquarters location in Long Island City, New York, that is expected to employ 25,000 people with an average salary of $150,000. This major influx of workers necessitates a diverse set of real estate options in the surrounding areas, including housing, dining, hospitality, and other services.

Unique Opportunity

While the largest real estate players are already scouring Long Island City for major investments, Compound will cast a wider net across a broader area and look for first- and second-derivative trades and smaller transactions where relative value may create an outsized opportunity for appreciation.

“Perfect Storm”

Most of the area near Amazon HQ2’s location has been designated an “Opportunity Zone” by the US Department of Treasury. This means that private investors may be eligible for certain tax benefits in return for investing in these zones. That designation, coupled with the Amazon HQ2 announcement, is the “perfect storm” of opportunity for investors.

New Central Business District

Amazon will spawn an entire ecosystem near its headquarters, creating a new central business district much the same way that Hudson Yards is reinvigorating Manhattan’s west side. This new CBD is well connected to the region by multiple transit options, with additional transit improvements in progress.

Fund details

Targeted Returns

Compound NYC HQ2 ReTF is targeting 12 to 15% annual returns. Most of this return will come from long-term price appreciation. This ReTF will also generate a nominal yield from rental income. (However, there is no guarantee that the fund will achieve this targeted return.)

Liquidity

Compound intends to provide investors with liquidity by applying to list our shares on NYSE or Nasdaq after this ReTF becomes eligible. Once the ReTF shares have been listed on an exchange, they will be fully transferable like any other publicly listed stock. Until then, there are restrictions on transferring the shares.

Minimums & Eligibility

Compound is currently offering a pre-IPO private placement for this ReTF that is open to U.S.-based or foreign institutions, family offices, and “accredited investors” (under Rule 501(a) of Regulation D). The minimum investment amount for this ReTF is $10,000 (1,000 shares).

Fees

Asset Management - 1.0% of equity value (paid quarterly)

Acquisition - 1.0% of property purchase price

Equity Incentive Awards (Promote) - 15% of the total annual return subject to a 6% hurdle, payable in shares to the Fund Manager.

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